When it comes to real estate investing, one strategy stands out for its ability to build wealth while significantly reducing your personal living expenses: house hacking with multifamily properties. If you’ve ever wondered how to invest in real estate without breaking the bank, this could be the perfect starting point.

What is House Hacking?

House hacking is a strategy where you purchase a property, live in one part of it, and rent out the other parts to offset your housing costs. It’s a popular way for new investors to dip their toes into real estate because it allows you to generate rental income while reducing or even eliminating your monthly mortgage payment.

While house hacking can be done with single-family homes (by renting out rooms), multifamily properties, such as duplexes, triplexes, and fourplexes, take the concept to the next level. With multifamily house hacking, you live in one unit and rent out the remaining units to tenants.

Why Multifamily House Hacking Works

Here’s why house hacking with a multifamily property is such a powerful strategy:

Rental Income Pays Your Mortgage When you rent out multiple units, the rental income from your tenants can cover a significant portion—if not all—of your mortgage payment. This means you’re effectively living for free, or close to it, while building equity in your property.
Low-Cost Entry into Real Estate Investing Because you're living in the property, you can qualify for owner-occupied financing. This typically means lower down payments and better interest rates compared to traditional investment loans. FHA loans, for instance, allow you to put as little as 3.5% down, making it easier to enter the market.
Tax Benefits Multifamily properties provide numerous tax advantages. Not only can you deduct mortgage interest and property taxes, but you can also claim deductions for property repairs, depreciation, and other expenses related to maintaining the rental units.
Learning While Earning House hacking gives you hands-on experience as a landlord while you continue to live in the property. This is a low-risk way to learn about property management, tenant screening, maintenance, and more. Essentially, you get to experience real estate investing firsthand, with your tenants helping you cover the costs.
Build Long-Term Wealth As your property appreciates in value and your mortgage is paid down by rental income, you’re building equity. Over time, this can lead to significant wealth creation. Plus, with multifamily house hacking, you can save up for your next investment property faster.

How to Get Started with Multifamily House Hacking

If you’re ready to explore house hacking with a multifamily property, here’s a roadmap to get started:

Educate Yourself Before jumping in, take the time to understand the ins and outs of real estate investing and house hacking. Read books, listen to podcasts, and consult with experienced investors who can guide you through the process.
Analyze the Market Look for areas where multifamily properties are available at reasonable prices and where rental demand is high. Consider working with a Realtor who specializes in investment properties to help you find the right deal.
Run the Numbers The key to successful house hacking is making sure the rental income from the other units can cover most, if not all, of your mortgage and expenses. Analyze cash flow, potential vacancy rates, and maintenance costs before making a decision.
Secure Financing Take advantage of owner-occupied loans such as FHA, VA, or conventional loans, which often have lower down payment requirements. Make sure to shop around for the best rates and terms.
Find the Right Tenants Once you’ve purchased the property, screen tenants carefully to ensure you find responsible individuals who will pay rent on time and take care of the unit. Good tenants are key to a stress-free house hacking experience.

Is House Hacking Right for You?

House hacking with a multifamily property is a fantastic strategy for new investors or anyone looking to reduce their living expenses while building wealth through real estate. It requires some work—you’ll be a landlord after all—but the financial rewards can be significant.

If you’re willing to live near your tenants, take on property management tasks, and want to grow your investment portfolio, this strategy could be a game-changer for your financial future.

Final Thoughts

House hacking with a multifamily property is more than just a way to save on housing costs—it’s a proven method to accelerate your real estate investing journey. By leveraging rental income, you can build equity faster, learn the ropes of property management, and set yourself up for long-term wealth.